I’ve just read something on Facebook where someone trying to buy a house was gazumped and they aren’t happy about it.
So far, I agree, I wouldn’t be either but then they go on to blame the Estate Agent selling the property.
Perhaps the service was poor in other respects but I just need to do something very boring now and cover the law for the uninitiated.
1. Anyone can put in an offer on a house, even if they haven’t viewed it; there’s no law saying they can’t, so they can. Of course, it doesn’t happen very often for obvious reasons and it’s not advisable for equally obvious reasons but that’s not the point – they are legally allowed to do it;
2. The Estate Agent is legally obliged to pass ALL offers onto their client, the seller – LEGALLY OBLIGED! They are breaking the law if they don’t and can be sued by both potential buyer and their client, the seller.
I have had a potential gazumping situation recently and this is what I did and all I can do; in the end the decision is the seller’s.
a) Find out the financial position of anyone offering on the property. i.e. do they have to sell to buy and if so, have they sold yet, and if so, how long is the chain?
b) Anyone claiming to be using a mortgage and/or cash to buy must demonstrate this by showing me the appropriate Mortgage Agreement and/or the Bank/B Soc/ISA statement to prove that the claimed cash actually exists;
c) I then inform my client (remember an agent can only have one legal client, the sellers) of the amount of the offers and the positions of the potential buyers;
d) If we are getting into an offer and counter-offer scenario, I ask all potential buyers to write down their full and final offer i.e. the maximum they are prepared to pay – this process is usually referred to as ‘going to sealed bids’; this process is done to bring the matter to a head but is NOT legally binding on either party.
e) I acknowledge the offers in writing (email is fine in 2017) to the potential buyers along with their stated financial and chain positions and ask them to confirm one final time that this information is correct;
f) I then speak to my clients (the sellers) and point out to them the pros and cons of the offers on the table. NB It’s not just the highest numerical offer that is always accepted. If I was offered £300,000 in cash, I may well take it in preference to £310,000 with a 5 or 6 party chain;
g) JUST REMEMBER THAT AROUND 1 IN 3 AGREED PURCHASES ACTUALLY FALL-THROUGH FOR A VARIETY OF REASONS BUT THE LONGER THE CHAIN, THE MORE RISKY IT IS;
h) The sellers then make a decision and that, in theory, is that unless the sale falls through and you have to start again;
i) HOWEVER! As I said above, it’s not actually illegal from someone to come back with a higher offer and I, as the agent, am legally bound to pass it on because my job is to do the best I can for my legal client, the seller; and an extra £10,000 for example would pretty much come into the category of doing better for the seller;
j) Of course I say to the seller that they have to consider the morality of allowing the agreed buyer to be gazumped and I’m glad to say that in my recent case my client stuck with their original decision but buyers need to understand the law as it relates to selling a property –
IF, AT ANY TIME, INCLUDING AN HOUR BEFORE EXCCHANGE OF CONTRACTS, A COUNTER-OFFER COMES IN, I AM LEGALLY OBLIGED TO INFORM MY CLIENTS AND THEN TO CARRY OUT THEIR INSTRUCTIONS.